Bumper return for Church's assets

Three years of unsettling world economic conditions have eased.

The Church of England's share portfolio rose 17% in 2003 to £3.9bn - the best return in four years, figures show.

Following a stock market loss of £546.8m in 2002, the church recorded a gain of £429.5m during 2003, the Church Estates Commissioners said.

Its total assets were still below the 10-year high of £4.5bn in 1999.

Church finances have suffered a disappointing three years during the world economic downturn exacerbated by the 9/11 attacks.

Commissioner Andreas Whittam Smith said: "The total return was in line with the average fund's performance, although it is a little disappointing that our performance in some classes - notably UK equities and commercial property - fell below relevant benchmarks in 2003."

These imbalances suggest that we as investors should remain cautious Andreas Whittam Smith Church commissioner

"The commissioners' 10-year and five-year records nonetheless remain very satisfactory."

In the annual report, the church said it had £114.4 million invested in telecoms giant Vodafone and a £111.3 million stake in oil multinational BP.

From commercial property sales, it raised £30 million last year and plans to spend almost £70 million next year.

The commissioners also highlighted an average total return for its fund over the last decade of 10.2%, compared with 6.4% for similar funds.

Hazards ahead

Looking ahead, Mr Whittam Smith said he expected 2004 to be a "broadly satisfactory" year.

"Equity markets have recovered; modest economic growth is under way," he wrote in the annual report.

"Nonetheless many hazards are evident both overseas and at home. The huge deficit on the US balance of payments is a cause for concern, as is the high level of indebtedness of the average British consumer.

"These imbalances suggest that we as investors should remain cautious."

The Church's general fund is used to pay for clergy pensions for those in service before 1998 as well as supporting cathedrals, bishops and the parishes in the most needy areas of the country.